Wall Street’s Dr. Doom isn’t as gloomy about the US economy as he has been in past years.
Nouriel Roubini, the famed economist known for his bearish views on the market, is surprisingly upbeat in the face of tariff-fueled anxieties and broad economic uncertainty that’s been a headwind for stocks.
Speaking with Bloomberg this week, the New York University professor gave his thoughts on a range of topics, offering up predictions on a recession, the bond market, and AI.
Here are four things the renowned economist is thinking about.
A mild US recession by year-end
The US could enter a downturn by the fourth quarter of 2025, which could be brought on by the inflationary impact of tariffs, Roubini predicted.
Roubini thinks it’s likely that Trump will edge back from the harshest tariff threats, resulting in a 10%-15% universal duty on goods imported from other countries and a 60% tariff on China.
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That’s the tariff plan Trump originally proposed on the campaign trail, Roubini noted. Under that plan, he estimated that core Personal Consumption Expenditures inflation, the Fed’s preferred inflation measure, could trend toward 4% by the end of the year, up from 2.6% in March.
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“That’s a hit to disposable income. You have weakening of consumer and business sentiment,” he said of his recession forecast. “It’s going to be short and shallow because then the Fed is going to cut rates,” he said.
A US investment boom fueled by tech
While some investors have been shifting away from US assets, Roubini sees the US market prospering over the next several years, largely due to optimism stemming from increased productivity.
He pointed to America’s edge over other nations in technological advancements like AI, robotics, and quantum computing.
In his view, growth resulting from those areas could more than offset the negative impact of tariffs. Roubini estimated that tech advancements could raise US yearly growth from 2% to 4% by the end of the decade.
Assuming that Trump imposes a 10% universal tariff and a 60% tariff on China, trade policy will likely dent US growth by just half a percentage point over that timeframe, he said.
“What I’ve recently said is that tech trumps tariffs. And what I mean is that the US is really number one in many of the technologies of the future,” Roubini said.
“I think that’s why that over the medium term, the fact that the US is very innovative implies that whatever Trump does, doesn’t matter. So tech trumps tariffs, tech trumps Trump too,” he added.
Bond-market guardrails
Trump could be forced to de-escalate his trade policy due to actions by so-called bond vigilantes, traders who stage a sell-off in US Treasurys in order to force the government to exercise more fiscal restraint or implement more favorable economic policies.
Evan Vucci/AP
Trump, who has said he wants to lower borrowing costs for Americans during his term, is keeping an eye on the 10-year US Treasury yield, his team has said.
The president also indicated he was watching the bond market prior to announcing the 90-day pause on tariffs in April, though he later claimed he wasn’t worried about the sell-off.
“The most powerful people in the world are the bond vigilantes. So I think he’s boxed in. There’ll be de-escalation,” Roubini said.
Gold will keep shining
Tariff jitters have made gold more attractive to investors, and that trend will likely continue, Roubini said. He also speculated that the US dollar could continue to weaken in the coming years.
Gold will likely reap the largest gains from this trend, Roubini said. For one, traders selling the US dollar and Treasury bonds are unlikely to scoop up other foreign currencies in significant amounts, as that could raise the value of those currencies relative to the dollar, which could upset some political alliances.
Gold, meanwhile, is a reserve asset that cannot be seized, Roubini added, pointing to when Russia’s foreign reserve assets were confiscated by the US and the EU shortly after the invasion of Ukraine in 2022.
“You want to have good relations. So what do you do? The best things you can do is to sell Treasurys and buy gold,” he said. “So I would see gold being the biggest winner.”
